Re: Ripple

Thanks Evan for engaging, this thread has been very helpful indeed.

p.



On Wed, Nov 20, 2013 at 3:38 AM, Joseph Potvin <jpotvin@opman.ca> wrote:

> Evan, Your collaboration in this discussion is very much appreciated.
> Thanks.
>
> Joseph Potvin
>
>
>
> On Tue, Nov 19, 2013 at 1:58 PM, Evan Schwartz <evan@ripple.com> wrote:
>
>> So, as much as I might personally like to continue this vein of
>> conversation, I think we're straying farther into the economics of XRP than
>> I can really speak to.
>>
>> The way the system stands now is that there are 100 billion XRP, that's
>> all there'll ever be, and it's not in our or anyone else's power to change
>> that now. Ripple Labs plans to distribute more than 50 billion of those
>> through giveaways and promotions. All of the software is open source so
>> anyone is free to create a different network governed by different rules.
>>
>> That being said, we think that the Ripple network as it stands now offers
>> the potential to federate different payment systems, facilitate easier,
>> cheaper, and faster flows of money than has ever been possible before, and
>> all while keeping the state of everyone's balances secure and preventing
>> spam.
>>
>> If anyone is interested in watching the talks that myself and some of the
>> others at Ripple Labs gave at the Money2020 conference explaining various
>> parts of the Ripple network you can find them here:
>> https://ripple.com/blog/ripple-developer-conference-2013-replay/
>>
>>    - Chris Larsen, the CEO, gave a general overview<https://www.youtube.com/watch?v=oGribd0RnFc>
>>    - I gave a technical overview<https://www.youtube.com/watch?v=Siim2SmLFLc>
>>    - David Schwartz, the chief cryptographer, gave a talk about architecture
>>    and advanced users <https://www.youtube.com/watch?v=NtmPy-0gxWI>
>>    - and Stefan Thomas, the CTO, gave a talk about the future focus of
>>    the engineering team <https://www.youtube.com/watch?v=-aDiI9e4KoE>
>>
>> If anyone has more questions about the technical setup of the network or
>> how it might be used in conjunction with the work this group is doing, I'd
>> be more than happy to try to take a stab at them.
>>
>> Evan
>>
>>
>> On Mon, Nov 18, 2013 at 4:39 PM, Joseph Potvin <jpotvin@opman.ca> wrote:
>>
>>> RE: If there weren't some fixed amount of XRP in the system from the
>>> beginning, how would you propose making it appear and disappear?
>>>
>>> The same way you developers made the XRP appear: "poof". There they
>>> are!  Welcome to fiat money. The same way my mortgage company created the
>>> CAD$ to finance my entitlement to a house: "poof". They pretended they
>>> "lent" me money that they had prior to issuing the mortgage. And I
>>> pretended to go along with the gag. But before the loan, those CAD$ simply
>>> did not exist. Same with any loan, credit card, or line of credit, from a
>>> fiat-based financial institution. Fiat money is conjured into existence.
>>>
>>> RE: Who would control that and determine what "as needed" means?
>>>
>>> An algorithm could conjure XRPs into and out of existence in any
>>> proportion needed to facilitate the velocity of Ripple transactions.  What
>>> do you think Ben Bernanke et al have been doing?
>>>
>>> RE: Also, what exactly would be the benefit from pegging the value of
>>> XRP to something outside of the network? How would that make it a better
>>> unit of account than if it's just a digital currency whose value in terms
>>> of other currencies is just set by the market?
>>>
>>> (a) I haven't see a "unit of account" use case for XRPs.  I do see a
>>> "medium of exchange" use case in web payments.
>>> (b) The "set by the market" is what I was asking you about earlier. It's
>>> not really a market in its own right. Even A3, the flesh and blood person
>>> would really just make guesses that combine what my A1 algorithm and A2
>>> algorithm were linking to. While there is a supply and demand market for
>>> currencies, its operation is completely overwhelmed by the speculative
>>> market that operates for the most part in an opposite way than the supply
>>> and demand market. It's certainly not anything like the markets for copper,
>>> or car repair services or bananas.
>>>
>>> RE: The use case for people holding XRP is the same as the reason people
>>> are holding (and buying copious amounts of) bitcoin. It's an asset that may
>>> rise (and fall) in value
>>>
>>> And in both cases, those are pure speculation plays.  I propose that XRP
>>> has a use case other than speculation, and to the extent it's given a
>>> speculative character, that's an unnecessary and even possibly a flaw
>>> that's harmful to the operational advatanges of Ripple. Suppose some
>>> community takes the free/libre code and sets up Zipple, which maintains
>>> just enough ZRPs to handle the variable transaction need for web payments,
>>> but otherwise maintains no stock of ZRPs?  Say the operator earns its
>>> income on a transaction fee modelled on the Tobin Tax.  Would that be less
>>> useful to the transacting parties in web payments?
>>>
>>> Joseph Potvin
>>>
>>>
>>>
>>>
>>> On Mon, Nov 18, 2013 at 7:09 PM, Evan Schwartz <evan@ripple.com> wrote:
>>>
>>>> If there weren't some fixed amount of XRP in the system from the
>>>> beginning, how would you propose making it appear and disappear? Who would
>>>> control that and determine what "as needed" means?
>>>>
>>>> Also, what exactly would be the benefit from pegging the value of XRP
>>>> to something outside of the network? How would that make it a better unit
>>>> of account than if it's just a digital currency whose value in terms of
>>>> other currencies is just set by the market?
>>>>
>>>> The use case for people holding XRP is the same as the reason people
>>>> are holding (and buying copious amounts of) bitcoin. It's an asset that may
>>>> rise (and fall) in value, our intention is to focus on making the payment
>>>> highly useful but some people may get into it just to speculate on XRP.
>>>> We're envisioning that more people who are holding XRP will be using it to
>>>> facilitate exchanges between XRP and all of the other currencies on the
>>>> network.
>>>>
>>>>
>>>> On Mon, Nov 18, 2013 at 1:52 PM, Joseph Potvin <jpotvin@opman.ca>wrote:
>>>>
>>>>> Thanks Evan. It's certainly an interesting "thing". Please permit me
>>>>> to pursue the XRP a little further to be clear about what sort of thing it
>>>>> is. Money has three essential use cases: (1) a medium of exchange,
>>>>> (2) a unit of account, (3) a standard of deferred payment (requiring
>>>>> that it be a stable store of value). It seems to me that XRP has only
>>>>> one defensible use case, which is to be a hyper-efficient medium of
>>>>> exchange for web payments. I see no use case at all for it being treated a
>>>>> unit of account (hence my quip about saying it might as well be declared
>>>>> equal in value to a banana), and I see no use case for it being treated as
>>>>> a store of value (also why I chose the banana, which has a well-known short
>>>>> half-life).
>>>>>
>>>>> Why is the XRP not designed to just appear and disappear as needed,
>>>>> like a synthetic element in the periodic table. What's the use case for
>>>>> anyone or for Ripple Labs to "hold" any XRPs?
>>>>>
>>>>> Borrowing from someone else's thought: If XRP currently trades for
>>>>> ~100 XRP per 1 USD then 50 billion XRP retained by Ripple Labs and its
>>>>> investors is currently valued at 500 million USD in "goodwill". The only
>>>>> use case I can think of for that is to make Ripple Labs and its investors
>>>>> really happy as long as it lasts. I'm not against anyone making a bunch of
>>>>> money on creativity and carrying risk, but that's a separate matter. Is
>>>>> there any use case in that big stock of XRP from the perspective of the
>>>>> parties to web payments?
>>>>>
>>>>> Joseph Potvin
>>>>>
>>>>> On Mon, Nov 18, 2013 at 4:08 PM, Evan Schwartz <evan@ripple.com>wrote:
>>>>>
>>>>>> ripplescam.org actually hasn't posted anything since Ripple was open
>>>>>> sourced in September. The fact that the rippled code wasn't immediately
>>>>>> open sourced seems to have been the main gripe there.
>>>>>>
>>>>>> The purpose of having XRP in the network as an asset is twofold:
>>>>>> first it helps bridge between different currencies and second it's used for
>>>>>> very small transaction fees that help prevent people from spamming the
>>>>>> network.
>>>>>>
>>>>>> Right now the transaction fees are worth something like .0000001 USD
>>>>>> so most users won't notice them much, but it adds up quickly if you're
>>>>>> trying to spam the ledger or the network with junk transactions. In order
>>>>>> to do transactions on the network you need to be holding some XRP, so it
>>>>>> needs to be a "holdable" asset.
>>>>>>
>>>>>> When you "pay" the fee though we're not collecting that money, rather
>>>>>> it is being destroyed by the network (which has the effect of slightly
>>>>>> raising the value of everyone's XRP, so you're paying your fee to all of
>>>>>> the network users). This is why the fee currency needs to be internal to
>>>>>> the network so it can actually destroy some amount. If you go to
>>>>>> https://ripple.com/graph/ you can see in the top left how many total
>>>>>> XRP there are still in the network.
>>>>>>
>>>>>> Does that make sense?
>>>>>>
>>>>>>
>>>>>> On Mon, Nov 18, 2013 at 11:42 AM, Joseph Potvin <jpotvin@opman.ca>wrote:
>>>>>>
>>>>>>> RE: Ripple Labs isn't playing a hoarding game but
>>>>>>>
>>>>>>> I don't have any opinion on that at this point, but some people
>>>>>>> think it is: http://ripplescam.org/  (Sorry if posting that link
>>>>>>> seems aggressive. That's not my intent. It's out there and shows up in
>>>>>>> searches, so I'm just being forthcoming.)
>>>>>>>
>>>>>>> RE: "The value of 1 XRP matters to currency traders, Ripple Labs,
>>>>>>> and anyone else holding XRP as an asset. "
>>>>>>>
>>>>>>> That seems entirely unnecessary to me, and a "bug" in the current
>>>>>>> business architecture of Ripple. Why permit the holding of XRPs at all? In
>>>>>>> the grand scheme of things, what's the value added from their persistence?
>>>>>>> I still advocate for 1 XRP = 1 banana, compared with the XRP's current
>>>>>>> design. (To see where I'm actually coming from, see:
>>>>>>> http://www.bengrahaminvesting.ca/Outreach/2009_Symposium.htm and
>>>>>>> http://www.theglobeandmail.com/globe-investor/investment-ideas/commodities-as-a-global-currency/article1346127/
>>>>>>> ...although even more I prefer an "Earth Reserve" base, which I and some
>>>>>>> colleagues are working on.)  Meanwhile the private consortium aspect of The
>>>>>>> Fed is hardly something to be replicated -- the more successful Ripple
>>>>>>> becomes, the more suspicion and "divergent" interests it will attract. It
>>>>>>> fear it would become the monetary instantiation of The Peter Principle.
>>>>>>>
>>>>>>> In any case, the value of a BTC or an XRP is nothing more than brand
>>>>>>> loyalty, what the accountants call the value of "goodwill", since any
>>>>>>> number of parallel currencies just like them can be created.
>>>>>>>
>>>>>>> Joseph Potvin
>>>>>>>
>>>>>>>
>>>>>>> On Mon, Nov 18, 2013 at 1:56 PM, Evan Schwartz <evan@ripple.com>wrote:
>>>>>>>
>>>>>>>> Q1: What is it about the A's role, and about the B's role that
>>>>>>>>> positions all the A's as currency price makers, and all the B's as currency
>>>>>>>>> price takers?
>>>>>>>>
>>>>>>>>
>>>>>>>> Only that the A's have put out offers on the books. Anyone can
>>>>>>>> create an offer and it'll be treated equally to anyone else's. In practice
>>>>>>>> we expect that certain users will use the system primarily for currency
>>>>>>>> trading so you'll see a lot more offers put out by those but as far as the
>>>>>>>> system is concerned all accounts have the same potential functionality.
>>>>>>>>
>>>>>>>>
>>>>>>>> Q2: In this model, what are the criteria and information sources
>>>>>>>>> that A1, A2 and A3 are assumed to use when offering their preferred amounts
>>>>>>>>> of EUR to buy those USD? Anything and everything available to them, correct?
>>>>>>>>>
>>>>>>>> Yes. They have access to the same network data about existing
>>>>>>>> offers as everyone else.
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> Q: Can a machine register to and participate in Ripple? Or do all
>>>>>>>>> Ripple members need to be flesh&blood people. Is it possible for a machine
>>>>>>>>> to join Ripple as if it were a flesh&blood person, and if it did, would the
>>>>>>>>> Ripple system or team know or care?  Today, what's the proportion of
>>>>>>>>> machine accounts to flesh&blood accounts amongst Ripple subscribers?
>>>>>>>>
>>>>>>>>
>>>>>>>> People can definitely create bots that trade on Ripple. I'm not
>>>>>>>> sure it would be possible in any system to stop this from happening and I'm
>>>>>>>> also not entirely sure that we'd want to. Modern currency trading seems to
>>>>>>>> be more of a machine's game but what we're hoping for is that any human or
>>>>>>>> machine traders on the network will facilitate very cheap exchanges between
>>>>>>>> currencies, which will let basic users do cross-currency payments at a
>>>>>>>> fraction of the cost and time it takes now.
>>>>>>>>
>>>>>>>>
>>>>>>>> Okay, and this order book is determined by all the offers from A1,
>>>>>>>>> A2 and A3, however that plays out. Correct?
>>>>>>>>>
>>>>>>>> Yes.
>>>>>>>>
>>>>>>>>
>>>>>>>> Q: How does an EUR→XRP rate and an XRP→USD rate play into all of
>>>>>>>>> this?  Here's what I presume, correct me if I'm wrong...
>>>>>>>>>
>>>>>>>>> RE:  Transactions can and often do take multiple paths to get the
>>>>>>>>> best rate
>>>>>>>>>
>>>>>>>>> A path is a series of trades underway at a given time, correct,
>>>>>>>>> such as USD→CAD with CAD→EUR to get a USD→EUR trade.  And where a suitable
>>>>>>>>> path can't be found, the Ripple algorithm will insert XRP. Correct? XRP
>>>>>>>>> always fills in gaps.
>>>>>>>>>
>>>>>>>> In order to do a USD -> EUR trade the system will look at direct
>>>>>>>> USD -> EUR paths, USD -> XRP -> EUR paths, and I believe some more indirect
>>>>>>>> ones as well. XRP is meant to fill in those gaps so that you don't actually
>>>>>>>> need people trading on all of the possible pairs of currencies.
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> Q:  Does the value of 1 XRP matter?  As mere gap-filler, I don't
>>>>>>>>> think so.  XRP is just grease. Am I wrong?  In what context does the value
>>>>>>>>> of 1 XRP really matter?
>>>>>>>>
>>>>>>>>
>>>>>>>> The value of 1 XRP matters to currency traders, Ripple Labs, and
>>>>>>>> anyone else holding XRP as an asset. For anyone using the system to make a
>>>>>>>> payment the value of XRP won't really matter because their money isn't "in"
>>>>>>>> XRP for any real period of time like it would be with Bitcoin if someone
>>>>>>>> made a payment USD -> BTC -> EUR outside of the Ripple network. Payments
>>>>>>>> are either executed in atomic time or they'll fail if the rates have
>>>>>>>> changed dramatically between the time when a price was quoted and when the
>>>>>>>> user decided to execute it.
>>>>>>>>
>>>>>>>>
>>>>>>>> Q: Why not set the purchasing power of 1 XRP to the tangible market
>>>>>>>>> price of 1 banana?
>>>>>>>>>
>>>>>>>>> The 100 billion XRP's would thus be valued at about a dozen
>>>>>>>>> container ships of bananas
>>>>>>>>> http://www.bloomberg.com/news/2013-05-29/maersk-s-8-4-billion-bananas-add-to-ship-profits-freight.html
>>>>>>>>> I jest, of course. But my fundamental point here is that if XRP were tied
>>>>>>>>> to something tangible, RippleLabs would be trusted not to be playing some
>>>>>>>>> sort of massive hoarding game. XRP would be understood to be just grease.
>>>>>>>>> ...or bananas.
>>>>>>>>>
>>>>>>>> Ripple Labs isn't playing a hoarding game but we are hoping that
>>>>>>>> the price of XRP, and thus the 25 billion XRP that the company is using to
>>>>>>>> sustain itself, appreciates in value. I think most of the people in the
>>>>>>>> company would agree with Jeffrey Cliff's earlier comment. We only make
>>>>>>>> money if the network we've built and are continuing to improve provides a
>>>>>>>> useful service for people.
>>>>>>>>
>>>>>>>>
>>>>>>>> Is this "end user" a price taker?  I'm always interested in the
>>>>>>>>> price makers.
>>>>>>>>>
>>>>>>>> When I say end user I'm generally talking about price takers /
>>>>>>>> people trying to make payments
>>>>>>>>
>>>>>>>>
>>>>>>>> More questions?
>>>>>>>>
>>>>>>>>
>>>>>>>> On Mon, Nov 18, 2013 at 3:30 AM, Joseph Potvin <jpotvin@opman.ca>wrote:
>>>>>>>>
>>>>>>>>> Hello Evan, Thanks for this!
>>>>>>>>>
>>>>>>>>> RE: If you want to see all of the outstanding offers for any
>>>>>>>>> currency pair you can do that directly in the client.
>>>>>>>>>
>>>>>>>>> So, I see in my UML mind a stickman, whose role is labelled: [Fill
>>>>>>>>> in blank, referred to here as A]. There's another one: [Fill in blank,
>>>>>>>>> referred to here as B].  Let's say A1, A2 and A3 each want some USD, and
>>>>>>>>> each is offering their preferred amounts of EUR to buy those USD.  Let's
>>>>>>>>> say B wants some EUR, and so...
>>>>>>>>>
>>>>>>>>> RE: the path finding engine will search direct and indirect paths
>>>>>>>>> for the rate that is best for the initiator.
>>>>>>>>>
>>>>>>>>> So the path finding engine discovers that A2 is offering B the
>>>>>>>>> best rate.
>>>>>>>>>
>>>>>>>>> Q1: What is it about the A's role, and about the B's role that
>>>>>>>>> positions all the A's as currency price makers, and all the B's as currency
>>>>>>>>> price takers?
>>>>>>>>>
>>>>>>>>> Q2: In this model, what are the criteria and information sources
>>>>>>>>> that A1, A2 and A3 are assumed to use when offering their preferred amounts
>>>>>>>>> of EUR to buy those USD? Anything and everything available to them,
>>>>>>>>> correct?
>>>>>>>>>
>>>>>>>>> Now, the following observation is not meant in any way to
>>>>>>>>> challenge Ripple. It's only meant to acknowledge the environment within
>>>>>>>>> which Ripple and all the A's and all the B's have to live, for the time
>>>>>>>>> being. This is the $5.3 trillion / day forex ecosystem dominated by top
>>>>>>>>> predators:
>>>>>>>>>
>>>>>>>>>
>>>>>>>>> http://www.bloomberg.com/news/2013-10-04/swiss-regulator-probes-alleged-foreign-exchange-manipulation.html
>>>>>>>>>
>>>>>>>>> http://www.usatoday.com/story/money/business/2013/11/15/foreign-exchange-trading-investigation/3573499/
>>>>>>>>>
>>>>>>>>> http://www.theguardian.com/business/2013/oct/30/barclays-cooperating-investigation-manipulation-currency-markets
>>>>>>>>> "Treasury's War" by Juan Zarate
>>>>>>>>>
>>>>>>>>> http://www.publicaffairsbooks.com/publicaffairsbooks-cgi-bin/display?book=9781610391153
>>>>>>>>> "Currency Wars" by James Rickards
>>>>>>>>>
>>>>>>>>> http://www.us.penguingroup.com/nf/Book/BookDisplay/0,,9781591844495,00.html
>>>>>>>>>
>>>>>>>>> In this ecosystem, then, I'm wondering from where it is assumed
>>>>>>>>> that A1, A2 and A3 get their information to offer their preferred amounts
>>>>>>>>> of EUR to buy USD? Let's structure this directly:  Let's say that A1 and A2
>>>>>>>>> are machines running unique forex algorithms, and leave A3 as a flesh&blood
>>>>>>>>> person. So A3 is somebody who "watches the forex market" and reckons that
>>>>>>>>> some amount of EURs for USD is a good bet this afternoon.
>>>>>>>>>
>>>>>>>>> Q: Can a machine register to and participate in Ripple? Or do all
>>>>>>>>> Ripple members need to be flesh&blood people. Is it possible for a machine
>>>>>>>>> to join Ripple as if it were a flesh&blood person, and if it did, would the
>>>>>>>>> Ripple system or team know or care?  Today, what's the proportion of
>>>>>>>>> machine accounts to flesh&blood accounts amongst Ripple subscribers?
>>>>>>>>>
>>>>>>>>> Let's focus on A1 and A2 machines. What are the most important
>>>>>>>>> data feeds that each machine's algorithm might be coded to draw upon in
>>>>>>>>> order to generate their EUR-for-USD offers at any given moment?  Let's say
>>>>>>>>> A1 is designed to statistically interpret the WM-Reuters spot rate
>>>>>>>>> http://www.wmcompany.com/pdfs/026808.pdf and is able to project
>>>>>>>>> it correctly by a few hours 60 per cent of the time. And lets say A2 is
>>>>>>>>> designed as "a news-trading algorithm. The computer will not be interested
>>>>>>>>> at all in long-term value considerations. It will look at semantic
>>>>>>>>> relations in news announcements"
>>>>>>>>>
>>>>>>>>> http://www.lgt-cm.com/shared/.content/publikationen/$verwaltung_publikationen/sciene/The-self-organization-of-markets-LGT-working-paper-v2-1_en.pdf
>>>>>>>>>
>>>>>>>>> RE: "Regarding the order book and exchange rates, the order book
>>>>>>>>> is public and is one of the pieces of information the system uses consensus
>>>>>>>>> to determine."
>>>>>>>>>
>>>>>>>>> Okay, and this order book is determined by all the offers from A1,
>>>>>>>>> A2 and A3, however that plays out. Correct?
>>>>>>>>>
>>>>>>>>> Q: How does an EUR→XRP rate and an XRP→USD rate play into all of
>>>>>>>>> this?  Here's what I presume, correct me if I'm wrong...
>>>>>>>>>
>>>>>>>>> RE:  Transactions can and often do take multiple paths to get the
>>>>>>>>> best rate
>>>>>>>>>
>>>>>>>>> A path is a series of trades underway at a given time, correct,
>>>>>>>>> such as USD→CAD with CAD→EUR to get a USD→EUR trade.  And where a suitable
>>>>>>>>> path can't be found, the Ripple algorithm will insert XRP. Correct? XRP
>>>>>>>>> always fills in gaps.
>>>>>>>>>
>>>>>>>>> Q:  Does the value of 1 XRP matter?  As mere gap-filler, I don't
>>>>>>>>> think so.  XRP is just grease. Am I wrong?  In what context does the value
>>>>>>>>> of 1 XRP really matter?
>>>>>>>>>
>>>>>>>>> The system is not designed for XRP hoarding, like BTC hoarding is
>>>>>>>>> done and even encouraged. It seems to me that XRP does what economists do:
>>>>>>>>> "Lets assume that this in-between trade did exist to complete the path."
>>>>>>>>> Then act as if it does. I don't mean to criticize -- it's a clever thing to
>>>>>>>>> do. But some have expressed concern that Ripple Labs is hoarding all the
>>>>>>>>> XRP, and that they will increase in value. So how about this:
>>>>>>>>>
>>>>>>>>> Q: Why not set the purchasing power of 1 XRP to the tangible
>>>>>>>>> market price of 1 banana?
>>>>>>>>>
>>>>>>>>> The 100 billion XRP's would thus be valued at about a dozen
>>>>>>>>> container ships of bananas
>>>>>>>>> http://www.bloomberg.com/news/2013-05-29/maersk-s-8-4-billion-bananas-add-to-ship-profits-freight.html
>>>>>>>>> I jest, of course. But my fundamental point here is that if XRP were tied
>>>>>>>>> to something tangible, RippleLabs would be trusted not to be playing some
>>>>>>>>> sort of massive hoarding game. XRP would be understood to be just grease.
>>>>>>>>> ...or bananas.
>>>>>>>>>
>>>>>>>>> RE:  all the end user really needs to know about is the amount
>>>>>>>>> it'll cost them in the currencies they have to send some amount in another
>>>>>>>>> currency to someone else
>>>>>>>>>
>>>>>>>>> Is this "end user" a price taker?  I'm always interested in the
>>>>>>>>> price makers.
>>>>>>>>> Joseph Potvin
>>>>>>>>>
>>>>>>>>>
>>>>>>>>>
>>>>>>>>> On Sun, Nov 17, 2013 at 10:36 PM, Evan Schwartz <evan@ripple.com>wrote:
>>>>>>>>>
>>>>>>>>>> Hi all,
>>>>>>>>>>
>>>>>>>>>> I am one of the engineers at Ripple Labs. I've been with the
>>>>>>>>>> company for 3 months so I can speak to a fair number of these points but
>>>>>>>>>> for the nitty gritty details of how consensus works I'll bring our chief
>>>>>>>>>> cryptographer David Schwartz into the conversation.
>>>>>>>>>>
>>>>>>>>>> Regarding the order book and exchange rates, the order book is
>>>>>>>>>> public and is one of the pieces of information the system uses consensus to
>>>>>>>>>> determine. If you want to see all of the outstanding offers for any
>>>>>>>>>> currency pair you can do that directly in the client.
>>>>>>>>>>
>>>>>>>>>> When someone wants to make a trade or do a cross currency payment
>>>>>>>>>> the path finding engine will search direct and indirect paths for the rate
>>>>>>>>>> that is best for the initiator. If you want to see visuals of these paths
>>>>>>>>>> happening you can go to ripple.com/graph and click on a
>>>>>>>>>> transaction entry to see a visualization of the paths. Transactions can and
>>>>>>>>>> often do take multiple paths to get the best rate but all the end user
>>>>>>>>>> really needs to know about is the amount it'll cost them in the currencies
>>>>>>>>>> they have to send some amount in another currency to someone else. If you
>>>>>>>>>> take a look at the Send tab in the client and have a couple of different
>>>>>>>>>> currencies in your wallet you can see this functionality in action.
>>>>>>>>>>
>>>>>>>>>> Happy to try to answer any more questions you all have, I think
>>>>>>>>>> there's a lot of opportunity for collaboration between Ripple and this
>>>>>>>>>> group.
>>>>>>>>>>
>>>>>>>>>> Evan
>>>>>>>>>> On Nov 17, 2013 3:25 PM, "Joseph Potvin" <jpotvin@opman.ca>
>>>>>>>>>> wrote:
>>>>>>>>>>
>>>>>>>>>>> Thanks,
>>>>>>>>>>>
>>>>>>>>>>> RE: it has an order book and the market determines the price
>>>>>>>>>>>
>>>>>>>>>>> How exactly?  And is the order book and associated process
>>>>>>>>>>> documented somewhere? I'd love to see the UML sequence or activity diagram,
>>>>>>>>>>> for example, but text will do.
>>>>>>>>>>>
>>>>>>>>>>> Is the general user experience that of a price-maker or
>>>>>>>>>>> price-taker? A currency "price maker" is asked to bid. A currency "price
>>>>>>>>>>> taker" is shown a rate as a fait-accompli.  And does the user make or take
>>>>>>>>>>> the intermediate XRP rate, or the destination currency rate?  (i.e. If Fred
>>>>>>>>>>> pays CAD to a vendor who wants to receive USD, he'd want to make or take
>>>>>>>>>>> the CAD-USD rate. The CAD-XRP then the XRP-USD rates would be invisible and
>>>>>>>>>>> of no concern to him.)
>>>>>>>>>>>
>>>>>>>>>>> Joseph
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>> On Sun, Nov 17, 2013 at 5:26 PM, Melvin Carvalho <
>>>>>>>>>>> melvincarvalho@gmail.com> wrote:
>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> On 17 November 2013 23:24, Joseph Potvin <jpotvin@opman.ca>wrote:
>>>>>>>>>>>>
>>>>>>>>>>>>> Melvin, Can you point to the specific documentation about how
>>>>>>>>>>>>> Ripple determines XRP inter-currency spot exchange rates with all the
>>>>>>>>>>>>> central bank currencies,and for BTC? And is there a documented policy for
>>>>>>>>>>>>> choosing the official source of exchange rate data for any other present or
>>>>>>>>>>>>> future alt crypto currency out there would be added to the Ripple portfolio
>>>>>>>>>>>>> of currencies?
>>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>> AFIAK it doesnt use a spot rate, it has an order book and the
>>>>>>>>>>>> market determines the price.
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>> Tx,
>>>>>>>>>>>>>
>>>>>>>>>>>>> Joseph Potvin
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>> On Sun, Nov 17, 2013 at 4:32 PM, Melvin Carvalho <
>>>>>>>>>>>>> melvincarvalho@gmail.com> wrote:
>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> On 17 November 2013 22:27, Fabio Barone <
>>>>>>>>>>>>>> holon.earth@gmail.com> wrote:
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> I should do this as a homework, I apologize,
>>>>>>>>>>>>>>>  but I'm currently pretty busy.
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> Would someone be so kind and answering these questions about
>>>>>>>>>>>>>>> Ripple:
>>>>>>>>>>>>>>>  - Is the code open source?
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> Yes
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> - Is the protocol they use openly documented,
>>>>>>>>>>>>>>>   as openly as bitcoin is?
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> I can only answer this superficially as I've not written a
>>>>>>>>>>>>>> web ripple implementation (yet)
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> But it seems to be yes: https://ripple.com/wiki/
>>>>>>>>>>>>>>
>>>>>>>>>>>>>> You only ever know after you've drilled down into every last
>>>>>>>>>>>>>> detail ... something I plan to do next year ...
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> thanks
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>> 2013/11/17 Manu Sporny <msporny@digitalbazaar.com>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> On 11/14/2013 04:30 PM, Andrew Miller wrote:
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>> 2. But this doesn't work for public/anonymous networks.
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> Why doesn't it work for public/anonymous networks? Link?
>>>>>>>>>>>>>>>> This is Web of
>>>>>>>>>>>>>>>> Trust stuff we're talking about, isn't it (chained trust
>>>>>>>>>>>>>>>> metrics)?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>  3. Ripple, on the other hand, takes yet another approach.
>>>>>>>>>>>>>>>>> There's no
>>>>>>>>>>>>>>>>> global administrator, but nor is there a well-understood
>>>>>>>>>>>>>>>>> public
>>>>>>>>>>>>>>>>> competition. Instead, individual users are supposed to
>>>>>>>>>>>>>>>>> configure
>>>>>>>>>>>>>>>>> their clients to identify particular servers they have
>>>>>>>>>>>>>>>>> determined
>>>>>>>>>>>>>>>>> they trust.
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> Isn't this a good thing? If you allow anyone to pick who
>>>>>>>>>>>>>>>> they trust, you
>>>>>>>>>>>>>>>> force cooperation in the system, don't you? The idea being
>>>>>>>>>>>>>>>> that for the
>>>>>>>>>>>>>>>> system to be useful, people need to coordinate and thus
>>>>>>>>>>>>>>>> won't pick
>>>>>>>>>>>>>>>> participants with whom they entirely disagree with.
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>  Here's where it gets really murky, and I can't figure out
>>>>>>>>>>>>>>>>> any set of
>>>>>>>>>>>>>>>>> assumptions that actually lead to robust functioning of
>>>>>>>>>>>>>>>>> the network.
>>>>>>>>>>>>>>>>> What if users entirely disagree with which servers they
>>>>>>>>>>>>>>>>> trust?
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> Why would someone deliberately do this? If you have to pick
>>>>>>>>>>>>>>>> from 32
>>>>>>>>>>>>>>>> servers, why would you pick from 32 servers that are in a
>>>>>>>>>>>>>>>> completely
>>>>>>>>>>>>>>>> different trust set? It would be incredibly difficult to do
>>>>>>>>>>>>>>>> that in a
>>>>>>>>>>>>>>>> dependency chain based system, wouldn't it?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>  Are they on two different networks or the same one?
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> No idea.
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>  If an individual doesn't do their due diligence, and
>>>>>>>>>>>>>>>>> carelessly
>>>>>>>>>>>>>>>>> approves bad servers, are they individually affected or
>>>>>>>>>>>>>>>>> does it
>>>>>>>>>>>>>>>>> affect the overall network?
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> I'd expect that in the worst case, the overall network
>>>>>>>>>>>>>>>> suffers. However,
>>>>>>>>>>>>>>>> the likelihood of this is in the 51% attack against the
>>>>>>>>>>>>>>>> Bitcoin network
>>>>>>>>>>>>>>>> category, isn't it?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>  I really wish more people were looking into this rather
>>>>>>>>>>>>>>>>> than ignoring
>>>>>>>>>>>>>>>>> it, because I suspect it's not sound (although I haven't
>>>>>>>>>>>>>>>>> come up with
>>>>>>>>>>>>>>>>> a super clear explanation why not), and if the underlying
>>>>>>>>>>>>>>>>> assumptions
>>>>>>>>>>>>>>>>> aren't sound then does it matter if the frontend UI is
>>>>>>>>>>>>>>>>> great?
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> Well, yeah, if the algorithm is broken then no UI in the
>>>>>>>>>>>>>>>> world is going
>>>>>>>>>>>>>>>> to save it. However, I don't think you've explained quite
>>>>>>>>>>>>>>>> why Ripple's
>>>>>>>>>>>>>>>> consensus algorithm is broken. Why is allowing individuals
>>>>>>>>>>>>>>>> to pick whom
>>>>>>>>>>>>>>>> they trust a bad thing (when the number of servers is large
>>>>>>>>>>>>>>>> enough)?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>  Unfortunately the only set of assumptions I can think of
>>>>>>>>>>>>>>>>> that lead
>>>>>>>>>>>>>>>>> to this actually working is where every one essentially
>>>>>>>>>>>>>>>>> picks the
>>>>>>>>>>>>>>>>> same default list, and the servers on that list are
>>>>>>>>>>>>>>>>> actually
>>>>>>>>>>>>>>>>> trustworthy.
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> I think the problem surfaces when a group of servers create
>>>>>>>>>>>>>>>> a trust set
>>>>>>>>>>>>>>>> that has no intersection with another set of servers. With
>>>>>>>>>>>>>>>> that said,
>>>>>>>>>>>>>>>> why would anyone do this? What's the attack?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>  This is the "centralized" option, where the default list
>>>>>>>>>>>>>>>>> determines
>>>>>>>>>>>>>>>>> who participates, and no user has any incentive to deviate
>>>>>>>>>>>>>>>>> from the
>>>>>>>>>>>>>>>>> default list, either by adding some newcomer they
>>>>>>>>>>>>>>>>> individually trust
>>>>>>>>>>>>>>>>> or by removing default servers they don't trust.
>>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> I thought that only a subset of the list needs to be
>>>>>>>>>>>>>>>> trusted for Ripple
>>>>>>>>>>>>>>>> to function, and all trust sets that all servers choose
>>>>>>>>>>>>>>>> have to overlap
>>>>>>>>>>>>>>>> by at least a small degree. Is that not true?
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> -- manu
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>> --
>>>>>>>>>>>>>>>> Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu
>>>>>>>>>>>>>>>> Sporny)
>>>>>>>>>>>>>>>> Founder/CEO - Digital Bazaar, Inc.
>>>>>>>>>>>>>>>> blog: Meritora - Web payments commercial launch
>>>>>>>>>>>>>>>> http://blog.meritora.com/launch/
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>>
>>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>>
>>>>>>>>>>>>> <http://goo.gl/Ssp56>
>>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>>>
>>>>>>>>>
>>>>>>>>>
>>>>>>>>> <http://goo.gl/Ssp56>
>>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>>> --
>>>>>>>> Evan Schwartz
>>>>>>>> Developer + Technology Pioneer
>>>>>>>> Ripple Labs Inc.
>>>>>>>>
>>>>>>>>
>>>>>>>>
>>>>>>
>>>>>>
>>>>>> --
>>>>>> Evan Schwartz
>>>>>> Developer + Technology Pioneer
>>>>>> Ripple Labs Inc.
>>>>>>
>>>>>>
>>>>>>
>>>>>
>>>>>
>>>>>
>>>>> <http://goo.gl/Ssp56>
>>>>>
>>>>
>>>>
>>>>
>>>> --
>>>> Evan Schwartz
>>>> Developer + Technology Pioneer
>>>> Ripple Labs Inc.
>>>>
>>>>
>>>>
>>>
>>>
>>> --
>>> Joseph Potvin
>>> Operations Manager | Gestionnaire des opérations
>>> The Opman Company | La compagnie Opman
>>> http://www.projectmanagementhotel.com/projects/opman-portfolio
>>> jpotvin@opman.ca
>>> Mobile: 819-593-5983
>>> LinkedIn (Google short URL): http://goo.gl/Ssp56
>>>
>>
>>
>>
>> --
>> Evan Schwartz
>> Developer + Technology Pioneer
>> Ripple Labs Inc.
>>
>>
>>
>
>
> <http://goo.gl/Ssp56>
>